Does our force majeure clause excuse performance under Iowa law?
For a sale of goods, Iowa Code § 554.2615 supplies a seller's excuse the clause does not have to create, and it opens with its own limits: "Except so far as a seller may have assumed a greater obligation and subject to section 554.2614 on substituted performance", delay in delivery or nondelivery in whole or in part by a seller who complies with subsections 2 and 3 is not a breach of the seller's duty if performance as agreed has been made impracticable by the occurrence of a contingency the nonoccurrence of which was a basic assumption on which the contract was made, or by compliance in good faith with any applicable foreign or domestic governmental regulation or order whether or not it later proves to be invalid. Where the causes affect only part of the seller's capacity, the seller must allocate production and deliveries among its customers "but may at the seller's option include regular customers not then under contract as well as the seller's own requirements for further manufacture", and may so allocate in any manner which is fair and reasonable (§ 554.2615(2)), and it must notify the buyer seasonably of the delay or nondelivery and, where allocation is required, of the estimated quota made available to that buyer. Section 554.2614, which the excuse is expressly subject to, can take the case away before impracticability is reached: where the agreed berthing, loading or unloading facilities fail, or an agreed type of carrier becomes unavailable, or the agreed manner of delivery otherwise becomes commercially impracticable, "but a commercially reasonable substitute is available, such substitute performance must be tendered and accepted."
The trap
The statutory excuse is conditional and one-sided on the section's words. It runs to a SELLER, and only to a seller "who complies with subsections 2 and 3": fair and reasonable allocation and seasonable notice are conditions of the excuse, not courtesies. A clause by which the seller assumes a greater obligation takes the case outside the section by its opening words, so a drafter who promises delivery come what may has contracted out of it. The other half of that opening points at the seller: a commercially reasonable substitute "must be tendered and accepted" under § 554.2614(1), so an excuse argued without trying the substitute is argued too early. And nothing in § 554.2615 excuses a buyer, or a party to a contract that is not a sale of goods; no Iowa authority on common-law impossibility or frustration outside article 2 is cited in this rule.
4 authorities
- statuteIowa Code § 554.2615enactment date not established
The words that state the rule
Except so far as a seller may have assumed a greater obligation and subject to section 554.2614 on substituted performance: 1. Delay in delivery or nondelivery in whole or in part by a seller who complies with subsections 2 and 3, is not a breach of the seller’s duty under a contract for sale if performance as agreed has been made impracticable by the occurrence of a contingency the nonoccurrence of which was a basic assumption on which the contract was made or by compliance in good faith with any applicable foreign or domestic governmental regulation or order whether or not it later proves to be invalid.
- statuteIowa Code § 554.2615enactment date not established
The words that state the rule
Where the causes mentioned in subsection 1 affect only a part of the seller’s capacity to perform, the seller must allocate production and deliveries among the seller’s customers but may at the seller’s option include regular customers not then under contract as well as the seller’s own requirements for further manufacture. The seller may so allocate in any manner which is fair and reasonable.
- statuteIowa Code § 554.2615enactment date not established
The words that state the rule
The seller must notify the buyer seasonably that there will be delay or nondelivery and, when allocation is required under subsection 2, of the estimated quota thus made available for the buyer.
- statuteIowa Code § 554.2614enactment date not established
The words that state the rule
Where without fault of either party the agreed berthing, loading, or unloading facilities fail or an agreed type of carrier becomes unavailable or the agreed manner of delivery otherwise becomes commercially impracticable but a commercially reasonable substitute is available, such substitute performance must be tendered and accepted.
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.